US intermodal sets October record as rail freight gains widen

U.S. railroads moved an average of more than 298,000 containers and trailers per week in October, the highest weekly average for any month on record, according to the Association of American Railroads. Intermodal volume rose 9.6% year over year, and total carloads gained 3.4% — the strongest percentage increase in eight months.

The AAR's monthly assessment, drawing on weekly traffic data through October, positions the record as evidence of demand holding firm against inflation, higher interest rates and weak consumer confidence. That framing deserves scrutiny, and the association itself concedes a gap between freight activity and household sentiment. Consumer prices in September stood 23% above their level five years earlier.

How broad was the gain?

Fifteen of the 20 carload categories the AAR tracks posted year-over-year increases in October, and 16 were higher through the first 10 months of 2026. The association said that breadth pointed to underlying industrial strength rather than a simple shift of freight from highways to rail. Carloads excluding coal rose 4.5%.

The past three months rank as the three strongest U.S. intermodal months on record. October — normally the peak month as retailers stock for the holidays — contained the first-, third- and fifth-highest-volume intermodal weeks ever recorded. Through October, intermodal traffic was up 4.7% from the same period last year, a pace the AAR said puts the industry on course for a new annual record.

What drove the intermodal record?

The association credited a mix of rail advantages and sustained demand:

• Higher diesel, insurance and maintenance costs for truckers
• Fewer available drivers amid a federal enforcement crackdown
• Solid rail service performance
• Resilient consumer spending and inventory replenishment by some retailers

Each factor is plausible; none is quantified in the report. The driver-shortage claim in particular rests on enforcement trends rather than a measured modal diversion figure.

Which carload sectors stood out?

Motor vehicles led October's gainers. U.S. carloads rose nearly 10%, about 5,900 shipments, from a year earlier. Counting Canadian and Mexican railroads, the increase exceeded 8,000 carloads, or 9% — the best percentage gain since December 2023. The AAR attributed the rise to strong buyer demand, though year-to-date vehicle carloads remain only slightly above last year, a fact the headline growth rate obscures.

Several industrial categories reached multiyear highs:

• Petroleum products: highest since February 2020
• Iron and steel scrap: strongest since September 2008
• Steel products: best October since 2018
• Grain mill products: an October record

Chemicals, the second-largest source of rail revenue after intermodal, posted their fastest carload growth in seven months. The AAR said chemical shipments were virtually certain to set an annual record, supported by a manufacturing resurgence.

Grain remains the largest contributor to year-to-date carload growth, up about 10%, or 92,000 carloads, through October. October itself, however, brought the first year-over-year grain decline in 12 months. The report tied grain swings largely to exports, which rose 13% by volume in the first half of 2026 before falling in the third quarter.

Coal rose fractionally in October after seven consecutive monthly declines, yet remains down 1.6% for the year to date. Higher coal exports partly offset weaker domestic coal-fired generation. Cheap natural gas continues to weigh on demand: inflation-adjusted U.S. gas prices over the preceding six months averaged roughly 25% below their decade average, making gas-fired power more competitive against coal.

What do the indicators say?

The AAR Freight Rail Index, which strips out coal and grain and seasonally adjusts the remainder, reached its second-highest level on record. Railcars in storage fell for the eighth time in nine months to 17.5% of the North American fleet — the lowest share since December 2022, a signal that operators are returning idle equipment to service rather than merely running existing fleets harder.

On the wider economy, the report cited preliminary third-quarter GDP growth of 3.4%, unemployment of 4.1%, an initial October payroll gain of 165,000 jobs, and a manufacturing PMI in expansion for a 10th consecutive month.

The AAR cautioned that policy changes after the mid-term election could create uncertainty. Its expectation, nonetheless, is that rail volumes will continue growing into 2027 — a projection, not a measured result, and one that rests on freight demand outlasting the cost pressures the report itself documents.